- November 20, 2014
- All Issuing Offices
- CLAIMS AVOIDANCE - Check Fraud Involving Identity Theft, Inspection Contingency, and Early Disbursement
This bulletin advises you of a check fraud scheme involving identity theft, bogus inspection contingencies and requests to disburse funds prior to closing.
In this scheme, the perpetrators pose as both a real property owner and a fictitious buyer, with the intent to defraud the title company. An agreement, which may be titled an "Option Money Escrow Agreement," is sent to a title company together with a sizable check, which may be referred to as an "option money deposit." The agreement instructs the escrow holder to advise the seller when the funds are deposited. Unbeknownst to the title company, the check is counterfeit. The agreement also calls for an inspection of the property by the buyer. The agreement instructs the escrow holder to release the funds, or a large portion of them, to the seller, upon satisfaction of the inspection contingency.
Shortly after the title company confirms that the funds have been deposited into the title company's bank account, the perpetrator, posing as the buyer, sends an email to the title company confirming a satisfactory inspection (which in reality has never taken place). The perpetrator, posing as the buyer, also authorizes the title company to release the funds to the seller. The perpetrator, then also posing as the seller, emails wiring instructions to the title company. The title company wires the funds to the seller's account (which is in reality the perpetrator's bogus account). Thereafter, the title company discovers that the original check was fake.
The real owners of these properties may have no knowledge that their identities have been stolen and that their properties are involved. Their properties may or may not be for sale. Communications between the perpetrators and the title company are not in person (i.e., only by email, fax, mail, etc.), enabling them to pose as both a property owner and a fictitious buyer. The properties and title companies may or may not be in the same area.
It may be possible to prevent becoming the victim of this scam by being vigilant regarding requests to disburse funds prior to closing (whether large or small amounts, for an inspection contingency or otherwise), and before it can be confirmed that funds have fully cleared.
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
- Bulletins Replaced:
- Related Bulletins:
- SA2014024 SPECIAL ALERT - Arkansas Counterfeit Check Scam
- SLS2010013 Check Fraud Schemes
- SLS2011005 Disbursement Practices: Good Funds vs. Collected Funds [Revised 04-27-12]
- SLS2014015 CLAIMS AVOIDANCE - Check Fraud Involving Large Overpayment
- Underwriting Manual:
- Exceptions Manual: